Support your financial goals across more than one account.
If you’re saving toward multiple goals, you might find it hard to keep on top of them in a single savings account. One way to organize your goals is to open a savings account for each.
Most banks and credit unions allow you to open more than one savings accounts, providing an effective way to streamline your finances with easy access among them. However, you’ll want to carefully read the terms and conditions of your accounts to avoid surprises down the road.
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Our top pick: Synchrony High Yield Savings
What are the benefits of multiple savings accounts?
- Easy goal management. Multiple accounts can help you better organize saving toward more than one goal — for instance, an account for your next vacation, one for an emergency fund and another to help pay for your kids’ education.
- Prioritization. When you only have one savings account, you might end up prioritizing just one of your savings goals. All your hard-earned cash goes into one account for one goal, which means you may not be putting any money aside to achieve your other financial goals.
- Recurring withdrawals. Most savings accounts limit transactions to six a month. With multiple accounts in your name, you can withdraw money from each account without exceeding limits, which is a more effective way to pay for recurring bills.
- Features. Savings accounts offer perks that vary by account type. In addition to an everyday savings account for monthly bills, you could open a CD to lock away money over a term for higher interest.
What are the disadvantages to multiple savings accounts?
Whether you stick with the same bank or open accounts across institutions, potential drawbacks include:
- It can get confusing. Multiple accounts can help simplify your savings, but they can also muck up the process if you’re having to keep track of too many. Make sure you can handle this approach before adopting it.
- Minimum balance requirements. If you spread your funds across multiple accounts, you might struggle to meet the minimum monthly balances for a few of them. Similarly, if you open an account that offers tiered interest — a higher interest rate on higher balances — you could miss out on the maximum available rate by moving your funds into other accounts.
- Extra fees. More bank accounts can result in more fees, if you’re not careful. Mounting costs can quickly eat into your savings.
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How many savings accounts do I need?
It all depends on your financial circumstances and goals. Multiple accounts can make balancing several short-term and long-term savings goals easier. If you receive income from multiple sources, you may find it easier to transfer payments from each source into separate accounts to save toward specific goals.
But if you’re organized, able to prioritize goals and have no problem keeping track of your money, one savings account could be all you need.
Will the FDIC deposit insurance apply to all of my savings accounts?
Your deposits of up to $250,000 are protected as long as they’re held in a bank or other financial institution insured by the FDIC. If your balance across accounts held at one institution exceed $250,000, you’re protected for $250,000 only.
To maximize the FDIC’s insurance, consider depositing your funds at another institution after you hit the $250,000 limit. Also, because limits are per account holder, you can put one of your accounts in your spouse’s or another beneficiary’s name to insure your balances beyond the limit.
Learn about FDIC deposit insurance and how you can increase your coverage
Can I stack new account signup bonuses?
Banks and financial institutions often offer incentives — gifts, higher interest rates or other bonuses — to stand out from competitors, though nearly always with restrictions.
For instance, most banks allow only one bonus offer per person, and current customers are typically excluded. Which means if you’ve already got an account with a bank, opening another to get that bank’s bonus offer typically won’t work.
Many financial institutions also limit how many accounts of one type you’re able to sign up for. For example, you may be allowed only one high-interest savings account.
Bottom line
As long as you’re earning interest and growing your savings, it doesn’t matter how many accounts you have. But multiple accounts can be a way to streamline and organize your goals.
When weighing savings accounts, compare interest rates, fees and features to find the best you’re eligible for.
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